Sunday, February 15, 2009

Character Building-- One New Equity High at a Time! - IFCN Wk 62 –Friday- Equity: $2,727.50

This was another brutal week for followers of FirstStrikePlus. These weeks are inevitable, but when they happen, they still can sting. I'm glad there weren't any OneNightStand trades on Friday. When forex markets are as choppy as we've seen recently, ONS trades rarely make much money. Still, if they occur, the odds are to take them.

To add insult to injury, every day seeing the future world economy in the process of being savagely ruined by lovers of Mr. O. leaves me pretty cold too.

But-- back to trading; some have written to me asking why the Challenge account doesn't take both long and short trades, meaning if one of the orders gets executed and subsequently stopped out-- then taking the opposite trade. This week's action is one of the good examples of why I don't.

Over thousands of trades, if you consistently took the second trade in the opposite direction after the first trade loss, (and even a 3rd and a 4th if the previous trades get stopped out) your execution results would be very likely be quite positive. They have been significantly so in the past. But the actual drawdowns one experiences trading in that manner have been very extreme at times. Like this week.

If you continuously reversed in the Eur/Usd pair this week you would have lost 3 consecutive trades and be underwater in a 4th. If you continuously reversed in the Usd/Chf this week you would have lost 4 consecutive trades. If you were risking a mere 1% per trade you could have lost nearly 8% of your account equity in just those two pairs alone. If similar losses occurred in the other weekly trades you can imagine the bloodbath to your account.

Even if the reverse trades have a sizable edge, which they indeed do--- the immediate risk to capital is something to consider.

The best trades are those which get executed at the earliest part of the week and continue throughout the rest of the week, never backing up at all. I prefer to defer to those trades and leave the reverse trades to those who are willing to put up with larger drawdowns than I am at this point in the Challenge account.

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Again, this week we've seen our trading equity severely reduced and our XAG position equity increasing proportionately to absorb the losses and continue on to new equity highs. Can this go on for much longer?

I doubt it. But I'll accept the situation like we accept the prediction of an early spring from the Punxsutawney groundhog. Tenuously.


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FirstStrike Plus trades executed this week:
  • gbp/usd: Long @ 1.4970, stopped at 1.4653 for a 318 pip loss.
  • eur/usd: Long @ 1.3038, stopped at 1.2892 for a 146 pip loss.
  • gbp/jpy: Short @ 130.86, stop 135.46. Trade in progress.
  • usd/chf: Short @ 1.1510, stopped at 1.1648 for 138 pip loss.
  • usd/jpy: Short @ 90.07, stopped at 91.54 for 147 pip loss.
As mentioned above, no OneNightStand trades occurred Friday.

Trading account equity: $1,869.50

Silver position equity: $858.00
(Current XAG price: $13.69 – 200 unit position average: $9.40)
TOTAL Equity: $2,727.50

Keep up the good work. I know that I'm not the only one taking these trades. When you suffer drawdowns it may build character, but does character have to cost so much? Apparently so, when you choose to learn from the experience.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail or Yahoo addresses. They've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

Week starting Feb. 9, 2009 - IFCN Wk 62 –Mon- Equity: $2,695.01

Last week saw a lot of red ink in the FirstStrikePlus trades and even the lone ONS trade taken in the Usd/Chf.

The only bright spot was, again; the XAG (silver) which ran up so much that we still had a new equity high by Monday morning, Feb. 9.

How long can this continue? Amazingly long, obviously.

As most of you know, I am quite bullish silver and silver derivatives. I have every belief that silver will outperform gold, oil, stocks, and almost every possible currency in the next five years. Nevertheless, even a strong market has corrections.

There is a possibility that we may get a noticeable correction in silver (XAG) and gold (XAU) in the last couple of weeks of February. If we don't, we could have a very serious rise ahead. (I got this info from personal long term cycle work, via W.D. Gann)

I know there haven't been many updates from me over the past week(s). It is not my style to write just to keep myself entertained, and the markets have not been very entertaining.

Actually, they've been a lot of work. I actively trade 20 futures markets and 5 currencies, (forex and futures) I've more than held my own over the last few months, but not without the market getting in quite a few licks in the meantime.

I would rather not get into how many times coffee futures trades and crude oil trades have gone from incredible profits to amazing losses overnight.

Such is the life of an “alpha” derivatives trader. Only by taking every one of “my” trades as they show up is it possible to extract the profits from inevitable significant moves that make this a business; instead of the gambling exercise most neophytes see it. (and treat it)

As of Monday, February 9, 00:00 CST – here is the status of the trades from the previous week:

Week of February 2, 2009---FirststrikePlus trades
  • gbp/usd: Short @ 1.4125, stopped at 1.4506 for 381 pip loss.
  • eur/usd: Long @ 1.2894, stop 1.2673. Still in play-profitable
  • gbp/jpy: Short @ 126.13, stopped at 130.27 for 414 pip loss.
  • usd/chf: Short from 1.1450, stopped at 1.1674 for 224 pip loss.
  • usd/chf: Short @ 1.1541, stopped at 1.1680 for 139 pip loss.
  • usd/jpy: Long @ 90.09, stopped at 88.97 for 193 pip loss.
  • usd/jpy: Short @ 88.97, stopped at 89.90 for 93 pip loss.
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OneNightStand trades for Friday, January 30, 2009
*Usd/Chf: long @ 1.1742, stopped at 1.1642 for 100 pip loss.

Trading account equity: $1,955.01
Loss from previous week: $ 92.73

Silver position equity: $ 740.00
(Current XAG price: $13.10 – 200 unit position average: $9.40)
TOTAL Equity: $2,695.01

It will be interesting to see what the next weeks' action will bring.

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Notice! While the Challenge account keeps making new equity highs, even by a little bit each week, but we keep losing in our FirstStrike trades, it tends to indicate that a serious drawdown is possible. Perhaps XAG will have a sizable correction or, perhaps FSP will continue to have numerous losses each week for a while.

One thing is very noticeable: the currency markets, along with most of the other main markets, such as the energies and stock markets-- are in ranges that are chopping every trader out there.

Either way, I will keep putting on the trades. I thought I would mention the possibility of a noticeable correction in equity. I'm sure you've had similar feelings.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail or Yahoo addresses. They've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

Monday, February 2, 2009

Another New Equity High - IFCN Wk 61 –Mon- Equity: $2,659.74

We are doing something right.

On Friday we closed very strong in our positions in XAG (silver), and FirstStrike Plus positions of gbp/jpy and gbp/usd. By Monday morning, the prices were much less favorable, but still favorable enough in the Sterling pairs to take decent profits.

Last week the long FSP eur/usd was a disappointment bringing a loss early last Friday. By Friday, we had significant losses in the short usd/chf and the long usd/jpy pairs too. That is what one can expect after a large, profitable week like the previous one.

Maybe we will start to get some basing action in these currencies and some strength vs. the dollar. It is a long week until the monthly Employment report this Friday.

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As of Monday, February 2, 00:00 CST – here is the status of the following trades coming in from the previous week:

Week of January 26, 2009---FirststrikePlus trades
gbp/usd: Long @ 1.4024, exited at 1.4411 for 387 pip profit.
eur/usd: Long @ 1.3096, stopped at 1.2867 for 229 pip loss.
gbp/jpy: Long @125.99, exited at 129.23 for 324 pip profit
usd/chf: Short @ 1.1450, stop 1.1674. Trade in progress.
usd/jpy: Long @ 90.09, stop 88.97. Trade in progress.
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OneNightStand trades for Friday, January 30, 2009
*None-

Trading account equity: $2,047.74
Loss from previous week: $25.18

Silver position equity: $612.00
(Current XAG price: $12.46 – 200 unit position average: $9.40)
TOTAL Equity: $2,659.74

Looking forward to another week.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail or Yahoo addresses. They've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!